China Manufacturing Growth Continues but Loses Momentum
China’s manufacturing sector expanded for the fourth consecutive month in March, although the pace of growth slowed as factories faced rising cost pressures and ongoing supply chain disruptions.
The RatingDog China General Manufacturing PMI declined to 50.8 from 52.1 in February. Despite the drop, the index remains above the 50 threshold, indicating continued expansion and marking one of the strongest readings in the past six months.
Output and Orders Increase at a Slower Pace
Both production levels and new orders continued to grow in March, extending a four-month expansion trend. However, the rate of increase eased compared to the previous month.
Export demand also improved, though at a more moderate pace, reflecting softer global conditions and cautious international demand.
Employment Rises as Backlogs Build
Manufacturing employment increased for a third consecutive month, marking the longest period of job growth since mid-2021. Companies expanded their workforce in response to rising backlogs, which grew at a faster rate due to capacity constraints and staffing adjustments.
Supply Chain Disruptions Intensify
Supply chain pressures remained significant, with supplier delivery times lengthening to their highest level since December 2022. Businesses cited ongoing disruptions, fluctuating input costs, and limited supplier capacity as key challenges affecting operations.
Cost Pressures Hit Multi-Year Highs
Input cost inflation accelerated to its highest level since March 2022, while output prices rose at the fastest pace in four years. Both indicators exceeded their long-term averages, highlighting increasing pricing pressures across the manufacturing sector.
Inventory and Purchasing Trends
Purchasing activity continued to expand for the third straight month, accompanied by a slight increase in input inventories. Meanwhile, finished goods inventories declined marginally as companies met demand by drawing from existing stock.
Outlook Remains Positive Despite Challenges
Despite current pressures, manufacturers maintained a positive outlook for the next 12 months. Confidence is supported by expectations of stronger demand, ongoing capacity investments, product innovation, and supportive government policies.
Although sentiment has eased from February’s recent peak, it remains stronger compared to earlier months, indicating continued optimism within the sector.
The survey was conducted between March 12 and March 23, gathering responses from approximately 650 manufacturing firms.
